Northeast Ohio Sewer District fires 2 contractors

The regional sewer district, under an FBI investigation into questionable contracts and cost overruns, fired two contractors this week who are working on projects totaling nearly $100 million.

One contractor, refusing to fix a plastic liner in a section of the pipe, has tied up a construction project for two years, the district said. The other overbilled the district by $11 million.

Terminating their contracts signals a change at the Northeast Ohio Regional Sewer District, which hired reform-minded Julius Ciaccia, former director of Cleveland's Water Department, in December as its executive director.

The contractors -- KM&M Joint Venture and KMM&K, which are basically made up of the same companies -- were terminated on the Big Creek interceptor and the Mill Creek Tunnel projects.

The $90 million Mill Creek Tunnel, the third and final leg of a $200 million, eight-mile-long tunnel that started in 1997, will collect and hold sewage that overflows during heavy rains and fouls the Cuyahoga River.

Andy Natale, a lawyer for both companies, said the district's claims were "bogus" and "a true injustice."

He said that the district made changes in both projects but took several months to turn them over to the contractors so work was delayed. Further, he said, the district never turned over revised designs to the contractors. "The district repeatedly stonewalled," he said.

The district and KM&M have been battling over who is responsible for a failed plastic coating installed in the Big Creek interceptor in 2006. Fixing it would cost more than $4 million.

The battle has shut the job down for two years. KM&M has filed a suit against the district in Cuyahoga County Common Pleas Court. "Claiming the liner has failed, we disagree," said Natale. The district has countersued.

In the Mill Creek project, work was stopped for seven months in 2004 because of methane gas leaking into the tunnel. During the stoppage, the district paid KMM&K an allowance for lost time, said Ciaccia.

But an audit, he said, showed that $11 million in payments for other expenditures to KMM&K were too much. The district withheld further payments and KMM&K sued. "The district wrongfully was failing to pay for work," said Natale.

Natale said the district notified him Thursday of the Big Creek termination, but he was not aware of his client losing the Mill Creek project. He said he was not surprised that the district told the press before telling his client. "The district has repeatedly acted in constant disregard of KMM&K's rights," he said.